Gain Therapeutics: this analyst just chopped his target

Roth Capital Partners analyst Boobalan Pachaiyappan lowered his target on Gain Therapeutics (Gain Therapeutics Stock Quote, Chart, News, Analysts, Financials NASDAQ:GANX) to US$5.00 from $8.00, saying the company’s experimental Parkinson’s disease treatment has shown encouraging signs of stabilizing motor function, but its effectiveness still needs to be demonstrated in a controlled clinical trial.

On Nov. 11, Pachaiyappan maintained his “Buy” rating following Gain Therapeutics’ third-quarter results and discussions with management about the next phase of development for Rexaceract, an oral treatment being studied in Parkinson’s patients with or without a GBA1 genetic mutation.

“Our key question is whether the next study can establish a credible treatment–placebo difference,” Pachaiyappan said. “More detailed presentations (including individual-level Ph1b patient data) could improve investor understanding, but randomized clinical evidence remains the next meaningful test.”

Gain reported stable motor function scores through 12 months in 12 evaluable patients participating in its Phase 1b study, based on data collected through Aug. 31. The results were measured using Parts II and III of the Movement Disorder Society-Unified Parkinson’s Disease Rating Scale (MDS-UPDRS), which assess daily living activities and motor function.

However, Pachaiyappan cautioned that stable scores in a study without a placebo comparison do not establish whether Rexaceract slowed disease progression.

The company plans to present more detailed Phase 1b findings at an upcoming International Association of Parkinsonism and Related Disorders (IAPRD) meeting.

“Better presentation could improve appreciation of the signal without constituting additional efficacy validation,” he said.

Pachaiyappan also expressed caution about the predictive value of glucosylsphingosine (GluSph), a biomarker being evaluated in the treatment program. Earlier findings suggested patients with higher baseline GluSph levels experienced greater clinical benefits, but that difference was not maintained in the longer-term results.

“Management acknowledged that the earlier high-GluSph clinical advantage was not sustained,” Pachaiyappan said. “We therefore view GluSph as a useful pharmacodynamic candidate, not a validated predictor of greater clinical benefit.”

Gain expects to begin its redesigned Phase 2 Parkinson’s disease trial in the first quarter of 2027. The proposed study includes an initial dose-selection stage involving approximately 35 patients, followed by a controlled assessment involving 111 patients. Safety will remain the primary endpoint, with motor function and additional digital measures also being evaluated.

The company estimates direct study costs of approximately US$20-million to US$25-million, within an overall funding requirement of approximately US$60-million through the planned data readout.

“The discussion sharpened the question raised on our prior call: what clinical result will justify the next investment?” Pachaiyappan said.

Gain ended the third quarter with US$11.7-million in cash after reporting a net loss of US$3.2-million, or US$0.07 per share, compared with the analyst’s expected loss of US$5.6-million, or US$0.13 per share.

Pachaiyappan now forecasts a fiscal 2026 loss of US$0.39 per share, compared with his previous estimate of US$0.48. His fiscal 2027 loss forecast improves to US$0.40 per share from $0.50. His revised valuation assumes Gain raises US$25-million through an equity financing in the first quarter of 2027 at US$2.50 per share, issuing approximately 10 million new shares. The lower target also incorporates a higher discount rate of 14%, up from 11%, and a reduced probability of approval for Rexaceract in Parkinson’s patients without a GBA1 mutation.

Pachaiyappan said the company’s development strategy must now balance the need for stronger clinical evidence against the potential dilution associated with additional financing. “The investment case now depends on translating these preliminary observations into controlled evidence while preserving shareholder value through financing,” he said.

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